In a QuEST for acquisitions, with $200 m in hand

Aerospace and automotive engineering major QuEST Global Services has earmarked about $200 million to acquire companies in the medical devices, transportation and digital space.

The company, which has Bain Capital, GIC and Advent International as investors, is also looking at a listing on the Nasdaq exchange by 2022, its chairman and CEO Ajit Prabhu told BusinessLine .

He said QuEST is in negotiations with four companies for acquisitions. “We have a very strong balance-sheet, and debt capacity is around $200 million. We have investors who are keen on investing in the company. So, by the financial point of view, we have plenty of room to acquire business worth $400 million,” he said.

In the last 20 years of its existence, QuEST has acquired 11 companies.

Prabhu said the company is looking at acquisitions in France, Canada and Mexico. Because our strategy is to build a global platform 24/7... follow the sun strategy... we have people in all these countries where technology is central and innovation is happening. Any given hour, we want to have QuEST engineers working on customer solutions, he said.

The company has also been growing organically at 10-15 per cent annually. “I think the opportunity to grow organically does exist but the rate of the growth is wholly dictated by the people internally. And I think we still have a lot of work to do. Our growth is limited by more internal challenges than external, that is a good problem to have.”

QuEST’s first funding worth $6 million came from Carlyle in 2003 during the Enron bubble. It exited the company in 2007 and by 2010, Warburg Pincus invested in the company. The equity was swapped with three private equity investors, Bain Capital, GIC and Advent International, with all of them together holding 30 per cent stock in the company.

The company which counts GE, Toshiba Medicals, Pratt & Whitney, BMW, Nissan and Renault, as some of its key clients, currently has over 8,000 employees across continents, expects to add another 12,000 by 2020. Half of its workforce has come through acquisitions. “If we are able to build people, build the process to scale the account, build a process to acquire and integrate, go after new accounts and get the HR engine in place, we can opportunities for a lifetime. “Billions of dollars can be expanded in outsourcing and what QuEST has done is barely scratching the surface. We have exploited a very small percentage of the opportunity,” Prabhu said.

Prabhu started QuEST Global along with his friend, Aravind Melligeri two decades ago who now runs Aequs Engineering, which makes parts for companies such as Airbus and Boeing.

Prabhu said the kind of work that QuEST does for its customers includes improving and managing legacy products. “We have the platform necessary to manage that. We also help them on the technology side by augmenting their resources. We help them in digital manufacturing, which is new to them... We build symbiotic relationships...”

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